The European Union (EU) is the number two destination market for Kenyan exports, after COMESA. In 2004, the share of
The above trade regime lapses on 31st December 2007, and thereafter it will be replaced by WTO compatible trade arrangement, which entails reciprocity between the ACP and the EU under the framework of an Economic Partnership Agreement.
The options which
Effects of EPAs on Kenyan Economy
In preparation for negotiation of EPA, Kenya has undertaken an impact assessment with a view to establishing: Macro and Social-economic effects of EPAs; Effects of EPAs on industry and agriculture, Impact of EPA on
Macro and Socioeconomic Effects
From a macro and socioeconomic perspective, the study reveals that potential gains will be: lower prices for consumers of imported goods sourced from EU. The analysis indicates that 34% of consumer goods imports are sourced from EU, 17% of motor vehicles, 58% of machinery and equipment and 22% of imported intermediate inputs. Thus elimination of the tariff will imply price reduction for Kenyan consumers. Trade is also projected to increase as a result of opportunities for enhancement of regional trade under EPAs as well as increased market penetration in the EU market. Already
This is likely to boost our export earning from COMESA beyond the current level of Ksh 77 billion annually. In essence, a concluded EPA negotiation between East and Southern Africa(ESA) and EU will increase south-south trade from Kenya as well as the volume of trade between
Effects of EPAs on industry and Agriculture
The EU is the largest single source of
To benefit from this,
The EPA is expected to pose significant challenges for some of
Strategies to Mitigate Negative Effects of EPAs
There exists an inbuilt mechanism through the EPAs negotiations to address the negative impact of EPA. These include negotiation of a phase-in period, FTA product coverage and development program. All these are geared towards upholding the intent of Cotonou Agreement that no country will be worse of than it currently is after conclusion. It’s a win-win for all countries.
In view of this,
1. Duty free access and quota free access to the EU market for all agricultural and no–agricultural products under simplified rules of origin regime.
2. Negotiating for less than 100% FTA product coverage for EU exports into
3. Proposal for comprehensive infrastructural and non-infrastructural constraints that have been singled out as inhibiting industrial and agricultural competitiveness.
4. Negotiating for improved predictability of EUs trade regulatory requirements such as SPS requirements and product quality standards through a negotiated SPS management and a capacity building program for trade facilitation institutions.
5. Regional market negotiation.
6. Negotiating Bilateral Fisheries Agreement with the EU on the basis of a regional fish framework Agreement. This is expected to unlock a huge potential for
In view of the massive gains to accrue to Kenyan economy out of EPAs, it’s therefore important that the private sector and the non-state actors rally behind timely conclusions of EPAs with the EU. The government, in collaboration with the European Union is pursuing this goal through the Kenya European Union Post Lome Trade program (KEPLOTRADE), which is facilitating this process through support from consultations among stakeholders, analytical work in support of negotiations and capacity building.
By David S.O Nalo
Permanent Secretary, Ministry of Trade and